Administrators for offsite construction specialist Merit Holdings have said they are “unlikely” to recoup the £17.4m owed to unsecured creditors.
Merit Holdings Ltd – the main trading arm of Merit Group Services Ltd – ceased operating last year after entering administration, owing creditors £31m.
James Lumb and Will Wright of Interpath were appointed as joint administrators on 18 November.
Northumberland-based Merit delivered modular construction projects across the healthcare, life sciences, education, battery technology and aerospace sectors.
In a statement of proposals published yesterday (7 January) on the Companies House website, the administrators said unaudited accounts for the firm to 30 June 2025 showed it had generated £4.2m in pre-tax profit from turnover of £79.7m.
Merit’s previous audited accounts to 30 June 2024 recorded turnover of £86.6m and a pre-tax profit of £2.3m.
The company suffered contractual disputes and delays on several large jobs, which severely impacted cashflow, the administrators said.
Pressure increased after the group became subject to an unexpected winding-up petition by HMRC, stalling new contract awards and delaying work on existing projects.
Directors explored refinancing and sale options before opting to place the business into administration after failing to find a solvent solution, the administrators said.
They added that they had completed a “substantial” disposal of assets worth £396,000 to Merit Industrialised Construction Ltd on 19 December.
Santander, a secured creditor of Merit Holdings, is owed £13m and the administrators expect it to recoup some of this under its fixed-charge security.
But they added that it is “uncertain whether there will be a dividend to Santander under its floating-charge security and will be dependent upon the level of asset realisations and costs incurred”.
Merit’s 284 staff were made redundant when the firm went under, and the administrators estimate that each ex-employee will receive £800.
The firm’s secondary preferential creditor, HMRC, is owed £537,020 but the administrators are uncertain as to whether this will be repaid.
Unsecured claims stand at £17.4m.
“Based on current estimates, it is highly unlikely that there will be a dividend to unsecured creditors,” Lumb said.
The administrators added that the firm is owed £3.2m, as well as money from existing legal disputes, which they said Merit Industrialised Construction would assist in collecting.
Last year, Construction News reported that work to build a £33m hospital in Berwick was temporarily halted after Merit filed a notice of intention to go into administration.
The Northumberland-based firm had been appointed in 2023 to build the state-of-the-art facility.
In a 2022 interview with CN, Merit boss Tony Wells predicted that his company would turn over £200m in 2023/24.
In June, Merit was named on a new four-year framework agreement for modular work, offering NHS trusts and public sector bodies a route to procure buildings valued from below £5m to above £25m.
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Nicola Harley